The first level of shift from “I” to “we” requires leaders to put the interest of their organisation ahead of their own self-interest.

In Good to Great, Jim Collins calls these people Level 5 leaders.

What distinguishes Level 5 leaders from other leaders is that they channel their ego needs away from themselves and into the larger goal of building a great company. It is not that Level 5 leaders have no ego or self-interest. Indeed they are incredibly ambitious—but their ambition is first and foremost for the institution, not themselves. The failure of business leaders to make this first shift from “I” to “We” is the single-most inhibitor of a company’s long-term sustainable performance.

The second level of shift from “I” to “we” requires leaders to embrace not only the interests of their organisation, but the interests of their partners with whom they have formed strategic alliances, and the interests of the local communities in which they operate. Having partners that support one another other builds resilience. Being involved in the local community builds goodwill. This is particularly true for retail establishments and banks.

The third level of shift from “I” to “we” involves not only supporting the interests of your business partners, and the local communities in which you operate, but also getting together with your business partners and your competitors to align the interests of your business sector to the long-term interests of society. This strategy of embracing the interests of all stakeholders is proving to be the most successful strategy in business.

The following figure compares investor returns over three, five and ten year periods ending on June 30, 2006 for the S&P 500, the “Great” companies identified by Jim Collins in Good to Great, and the “Firms of Endearment” identified by Sisodia, Wolfe and Seth. The “Firms of Endearment” show significantly superior performance over the longer term than both the S&P 500 and the “Good to Great” companies. (Click the diagram to enlarge)

According to the authors, the distinguishing feature of “Firms of Endearment” is that they treat all stakeholders equally—employees, customers, investors, partners and society. In addition they fully recognise that they are a part of an economic ecosystem with many interdependent participants; they are committed to exemplary citizenship; and they embrace the concept of servant leadership. The authors state, “If Firms of Endearment can be described by any one characteristic, it is that they possess a humanistic soul.” In my opinion, these companies are exemplars of the new leadership paradigm in the business sector.

[Level 5 leaders.” The meaning of this term is similar to the description of levels 5, 6 and 7 of the Seven Levels of Leadership Consciousness model.]